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Industrial product and raw materials price indexes, October 2019

Released: 2019-11-29

Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), edged up by 0.1% in October, primarily due to higher prices for energy and petroleum products. Prices for raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), were down 1.9%, primarily due to lower prices for crude energy products.

Chart 1  Chart 1: Prices for industrial products increase
Prices for industrial products increase

Industrial Product Price Index

The IPPI edged up by 0.1% in October. The IPPI excluding energy and petroleum products edged down by 0.1%.

Of the IPPI's 21 major commodity groups, 9 were up, 10 were down, and 2 were unchanged.

Energy and petroleum products increased by 1.2%, driven primarily by higher prices for diesel (+4.1%) and light fuel oils (+3.5%).

The increase in price for diesel fuel coincides with the seasonal increase in demand for heating fuel.

The increase stemming from these energy products was moderated primarily by decreases in prices for primary non-ferrous metal (-1.0%). This decline was driven mainly by lower prices for unwrought precious metals and precious metal alloys (-2.3%), including unwrought gold and gold alloys (-1.5%) and unwrought silver and silver alloys (-3.4%).

The decreases in prices of precious metals in October coincided with a rally in US equity markets, and expectations of a third consecutive interest rate cut by the United States Federal Reserve, which did occur on October 30, 2019.

On a year-over-year basis, the IPPI was down 1.3%, primarily due to a 9.5% decrease in energy and petroleum products. Other contributors to the decline were chemicals and chemical products (-5.3%), pulp and paper products (-5.4%), as well as primary ferrous metal products (-5.3%). The decrease was moderated largely by increases in prices of motorized and recreational vehicles (+1.4%), primary non-ferrous metal products (+3.0%) and meat, fish and dairy products (+2.3%).

Raw Materials Price Index

The RMPI was down by 1.9% in October. The RMPI excluding crude energy products increased by 0.8%.

Out of the RMPI's six major commodity groups, three were up and three were down.

The decrease in the index was primarily due to lower prices for conventional crude oil (-5.4%). This decline was moderated mostly by higher prices for animals and animal products (+1.3%) and crop products (+1.9%).

Cattle and calves (+2.7%), hogs (+1.8%) and live poultry (+2.0%) were the primary contributors to the increase in prices for animals and animal products.

Notable components that drove up prices for crop products were oilseeds (except canola) (+3.1%), grains (except wheat) (+2.1%), and canola (including rapeseed) (+4.4%). These price increases coincided with unfavourable weather conditions that affected the ability to harvest.

Year over year, the RMPI was down by 5.0%, mostly due to a 9.8% decrease in the price of crude energy products. Prices for animals and animal products were down by 1.6%. Crop product prices were mixed, with decreases in prices for canola (including rapeseed) (-7.6%) and wheat (-4.3%), and increases in prices for oilseeds (except canola) (+3.0%) and grains (except wheat) (+7.7%).

Chart 2  Chart 2: Prices for raw materials decrease
Prices for raw materials decrease



  Note to readers

The Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) are available at the Canada level only. Selected commodity groups within the IPPI are also available by region.

With each release, data for the previous six months may have been revised. The indexes are not seasonally adjusted.

The Industrial Product Price Index reflects the prices that producers in Canada receive as goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including transportation, wholesale and retail costs.

Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, which are then converted into Canadian dollars. In particular, this is the case for motor vehicles, pulp, paper and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. However, the conversion into Canadian dollars reflects only how respondents provide their prices. This is not a measure that takes the full effect of exchange rates into account.

The conversion of prices received in US dollars is based on the average monthly exchange rate established by the Bank of Canada and available in table 33-10-0163-01 (series v111666275). Monthly and annual variations in the exchange rate, as described in the release, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1 = US$X).

The Raw Materials Price Index reflects the prices paid by Canadian manufacturers for key raw materials. Many of those prices are set on the world market. However, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.

Products

Statistics Canada has launched the Producer Price Indexes Portal as part of a suite of portals for prices and price indexes. This webpage provides Canadians with a single point of access to a wide variety of statistics and measures related to producer prices. The portal offers an array of information on topics such as manufacturing, construction, professional services, distributive trades and financial services. The portal will be updated regularly as new information becomes available.

The video "Producer Price Indexes" is available on the Statistics Canada Training Institute webpage. It provides an introduction to Statistics Canada's producer price indexes—what they are, how they are made and what they are used for.

A Historical Timeline of Canadian Producer Price Statistics

The publication "A Historical Timeline of Canadian Producer Price Statistics," part of the Prices Analytical Series (Catalogue number62F0014M), was created to showcase the key milestones in the history of Canadian producer price statistics. This historical timeline contains answers to questions such as: "Who collected Canada's first statistics?" and "What do Canadian producer price indexes measure?"

Infographic: Producer Price Indexes at a Glance

The infographic "Producer Price Indexes at a Glance," part of the series Statistics Canada — Infographics (Catalogue number11-627-M), demonstrates how producer price indexes for goods and services are calculated and why they are important for the Canadian economy.

Real-time table

Real-time table 18-10-0248-01 will be updated on December 9, 2019.

Next release

The industrial product and raw materials price indexes for November 2019 will be released on January 6, 2020.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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